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Don't care about the extra fees. The sight of multiple 100s and 500s is enough to bring tears to my eyes. I am all set for next 2-3 months as I dont have to worry about travelling in the city using chillar.

asgkhan wrote:Finally the office ATM has been loaded with 500 and 100 notes. I withdrew 1900 * 5, now have sufficient cash for the next 3 months when it comes to doing chillar business.

Hmm ... strange. I guess this is an Office ATM in a tech park in BLR, Kerala and possibly a Citibank owned one (or was it your salary a/c in CitiBank) ?. Is it the ATM kept by a bank exclusively inside your company office or is it the ATM kept by a bank - inside your Tech Park sort of facility & thus common to more than one entity functioning in the facility ?.

Here in Chennai - it is nearly 4 weeks since all the common ATMs (Citi, HDFC, Canara Bank, SBI, ICICI, Karur Vysya & a few more) in the IT facility where i work have been running in pre-DeMo mode, flush with money (2000s, 500s & 100s) and back to pre-DeMo queue lines outside the ATM for taking out the money. FYI -there are a few thousands of workers in this facility. During December & January - there used to be long queues outside HDFC ATMs (because they were replenished twice each day while others were done only once per day or sometimes once per two days) and people could take out only 4000 per week or so. Often people were taking out money as a pre-cautionary measure rather than for real use.

Dahej: Emboldened by the latest GDP numbers, Prime Minister Narendra Modi on Tuesday strongly justified his November 8 demonetization decision and said that all the canards of India's economy collapsing that were spread by the critics have been completely defied.

"There were a number of canards spread and attempts were made to create an impression that there would be an apocalypse...the economy would collapse and GDP would plummet. Some people were sure to bear the brunt of his decision. But nothing of this sort happened and India is on a path of fast-paced development," Modi said in Dahej after inaugurating ONGC Petroadditions Ltd's (OPaL) Rs 27,000 crore plant.

The latest GDP data released by the Central Statistical Organization revealed that India had achieved 7% GDP growth in the October-December quarter.

Results of the Feb-Mar 2017 Assembly elections clearly demonstrate that claims by political parties like the Dynastic Nehru-Gandhi family led Congress and the Trinamool Congress on the degree of the hardship that Currency Demonetisation created for the electorate, was massively over hyped. The solid electoral performance of the architects of Demonetisation, the BJP, shows that the hardship imposed by Demonetisation was viewed as within acceptable limits by the electorate in Uttar Pradesh, Uttarakhand, Goa and Manipur. Regards Punjab, the punishment of the BJP at the hustings was preponderantly because of governance issues rather than the pain of Demonetisation.

Meanwhile Swapan Dasgupta's article on NaMo’s DeMo and the Assembly elections should be essential reading for all belonging to the Dynastic Nehru-Gandhi family led Congress and the Trinamool Congress:

I do not believe that Demonetisation was a principal factor in the solid electoral performance of the BJP in the just concluded Feb-Mar 2017 Assembly elections in Uttar Pradesh, Uttarakhand, Punjab, Goa and Manipur. What I do know though, going by the solid electoral performance of the BJP, is that the claimed hardship touted by political parties like Dynastic Nehru-Gandhi family led Congress and Trinamool Congress was clearly overhyped:

Were not some folks here saying, withdrawal limits will be there in the future to curtail use of cash and hence BM. Well....

Also, how many more months does the RBI need to compute the deposited figures? If anyone does believe their excuses...

Also, only 15 days left for Amnesty 2 to end. We will see how successful that has been to attract declaration of BM.

Since, we are now in a post shock period, we should be able to begin to make the proper economic impacts, if any.

One thing that was largely expected with the major attempt to arrest BM was its impact on real estate prices. I do not have much information on this score yet, but the rest of 2017, we should track if RE prices did have an impact.

Of course, the long term trends of digitization, which is inescapable and how far the forceful attempts to change behavior have succeeded is another thing to track.

On future trends, especially in light of the political capital the government now has tracking devolution of power, disinvestment, private capital investment, unemployment and growth in private sector jobs will be important metrics to track. So far the trend is towards centralization, strengthening of PSU's in the name of making them efficient and a reliance on classic social doles and government controlled schemes (albeit efficiently). To the government's credit, arresting inflation assisted by drop in oil prices and other minor administrative reforms, along with increased FDI' have kept things going. Hope the new found confidence in government, percolates down to confidence amongst business to invest and create jobs.

Overall, the assessment is that the impact of demonetisation on the real economy has been transient, given the information available so far. The analysis in this paper suggests that demonetisation impacted various sectors of the economy; however, the adverse impact, in general, was short-lived as it was felt mainly in November and December 2016. The impact moderated significantly in January and dissipated by and large by mid-February 2017, reflecting an accelerated pace of remonetisation.

The impact on GVA growth, albeit modest, was felt in Q3 of 2016-17. The organised sector remained largely resilient. The latest CSO estimates suggest that the impact of demonetisation on GVA growth in Q3 of 2016-17 was felt mostly in real estate and construction, but because of stronger growth in agriculture, manufacturing, electricity, and mining, the overall impact on GVA growth was modest. With remonetisation progressing at a fast pace, the adverse impact is expected to have reversed from the latter part of Q4 of 2016-17. GVA growth is estimated to recover significantly in 2017-18.

The 240 bps decline in food inflation during November 2016 to January 2017 was the combined effect of record pulses production, large winter arrivals of vegetables and some fire sales due to decline in demand following cash squeeze. However, inflation excluding vegetables moderated only marginally. Also, inflation excluding food and fuel remained sticky. The headline inflation outlook in the near term will hinge on how food inflation evolves.

With the return of SBNs, currency in circulation declined and deposits with banks surged. This expanded the balance sheet of banks and created large surplus liquidity in the system, which was managed by the RBI mostly through a mix of reverse repo and MSS securities. Reflecting this, the share of ‘investment in government securities’ on the asset side of banks’ balance sheet increased significantly. Large surplus liquidity led to a significant improvement in monetary policy transmission as reflected in a significant decline in deposit and lending interest rates. The sharp increase in low cost CASA deposits by banks is expected to have increased banks’ net interest income. However, this will need to be adjusted against the cost of managing the process of demonetisation. As regards other segments of the financial sector, some NBFCs, especially MFIs, were adversely affected, in terms of disbursals and collection of repayments. However, the situation for most NBFCs began to improve from late December 2016. Jan Dhan accounts increased by 23.3 million post demonetisation, while deposits under Jan Dhan accounts increased by ₹ 187 billion (41 per cent).

The impact of demonetisation on the various segments of the financial market has varied. Overnight call money market rate remained within the policy corridor, but with a softening bias due to surplus liquidity at banks. After initial softening, G-sec yields increased significantly on two occasions, i.e., after the announcement of application of incremental cash reserve ratio (ICRR) and the status quo in monetary policy in December 2016. Thereafter, yields have moved in either direction on account of both domestic and external factors, including the change in monetary policy stance in February 2017, which was largely not expected by market participants.

Reflecting the expected slowdown in sales and earnings, share prices of cash intensive sectors such as automobiles, FMCG, consumer durables and real estate declined sharply in November-December 2016. Most of these sectors have more than recovered the lost ground subsequently. In fact, the consumer durable sector outperformed the overall increase in the stock market post-demonetisation. The impact on the forex market was transitory.

Demonetisation has impacted some segments of the export sector such as readymade garments, and gems and jewellery. The impact, however, was transitory. Imports of gold increased sharply in November, but moderated in December.

There has been a significant improvement in the use of digital modes of payments post demonetisation, although their base is still small.

Overall, demonetisation has had some negative macroeconomic impact, which, however, has been transient as remonetisation has moved at an accelerated pace in last twelve weeks. More importantly, demonetisation is expected to have a positive impact over the medium to long-term. In particular, there is expected to be greater formalisation of the economy with increased use of digital payments. The reduced use of cash will also lead to greater intermediation by the formal financial sector of the economy, which should, inter alia, help improve monetary transmission.

Given the partial information that is available post demonetisation so far, the analysis, especially of growth, is only preliminary in nature. It should, therefore, be possible to make an analysis in greater detail as more data becomes available in the coming months.

Remonetization is chugging along nicely. As of February 24, 2017, India's currency in circulation was Rs. 11.64 lakh crore. Apparently between Jan 27 to Feb 24 upto Rs 1.72 lakh crore was added ( Rs 11.64 LC - Rs 9.92 LC ) or about ~RS 6000 crore/day . Remonetization is likely to go on for a while, that's the impression one gets from the following statement of the minister:

New notes are being printed continuously to fulfil the needs of the public, he said.

With central government continuing the attempt to curb the flow of black money in the country, the Income Tax department has now started countrywide raids on petrol pump owners and LPG distributors. The latest crackdown by the I-T department came in the wake of alleged conversion of demonetised notes of the denomination Rs 500 and Rs 1000 by way of deposits in excess of actual sales, during the implementation of the demonetisation policy.

Officials will be scrutinising the cash books of pump owners, under Section 133A of the I-T act, to ensure that sales corresponded with the deposits made in the pumps during the period when banned old notes were accepted for the purchase of fuels till December 3. Even excesses claimed by owners or distributors as outstanding debts received during the month-long period is being considered as illegal and according to the I-T act the defaulters will have to issue cheque of the amount to the Pradhan Mantri Garib Kalyan Yojana along with tax and penalty of 49.90 per cent.

Vice-chairman of the special investigation team (SIT) on black money, Justice Arijit Pasayat, said on Friday that after demonetisation, the Centre has collected around Rs 6,000 crore as tax on unexplained cash deposits so far, and the amount could go up.

...Even excesses claimed by owners or distributors as outstanding debts received during the month-long period is being considered as illegal and according to the I-T act the defaulters will have to issue cheque of the amount to the Pradhan Mantri Garib Kalyan Yojana along with tax and penalty of 49.90 per cent...

Imagine some of the BM amount showing up in valid JAM account holders 6 months prior to elections? Modi is evil only.

Rs 6000 Cr as tax implies around Rs 12000 Cr of Black Money recovered. This is very very small amount as compared to Rs 2-3 Lac Crores windfall to the exchequer arising from Rs 17 Lac Crores of Currency notes that was demonetized.

I don't think Modi has any intention to redistribute money like that. But direct benefit transfer can literally transfer money into a BPL account holder, though it's really the payment to address access to goods or services that were just subsidized on the supply side previously.

tandav wrote:Rs 6000 Cr as tax implies around Rs 12000 Cr of Black Money recovered. This is very very small amount as compared to Rs 2-3 Lac Crores windfall to the exchequer arising from Rs 17 Lac Crores of Currency notes that was demonetized.

We have to view this in a longterm perspective. Demonitization created a lot of expense for the BM holder. It could be between 15 and 50%. Better to pay tax and deposit it in FD.

Analysts at top brokerages are changing their tunes on the impact of demonetisation on the economy, including key parameters such as jobs. While the gross domestic product (GDP) data sowed seeds of doubt in the minds of naysayers, the Bharatiya Janata Party's resounding victory in Uttar Pradesh and government formation in four states seem to have turned them into believers.

Recent reports by Edelweiss and Nomura are citing ground surveys and changes in certain in-house indices to say that the ill-effects of note ban, such as fall in growth and loss of jobs, are either fading or did not happen at all. The change of call follows close on the heels of the state election results. If this played on their minds, the analysts did not say it aloud.

More such reviews could be on the way, say Street watchers.

The humor aspect apart, this underscores that the opposition to demonetization from the analyst spectrum was based on their skepticism over the ability of the political firmament to execute.

Suraj wrote:Recent reports by Edelweiss and Nomura are citing ground surveys and changes in certain in-house indices to say that the ill-effects of note ban, such as fall in growth and loss of jobs, are either fading or did not happen at all.

Verbal jugglery at best, either there were ill-effects or there were not. If they did not happen at all then how could they be fading? Did the analysts try and hedge their bets both ways?

Analysts at top brokerages are changing their tunes on the impact of demonetisation on the economy, including key parameters such as jobs. While the gross domestic product (GDP) data sowed seeds of doubt in the minds of naysayers, the Bharatiya Janata Party's resounding victory in Uttar Pradesh and government formation in four states seem to have turned them into believers.

Recent reports by Edelweiss and Nomura are citing ground surveys and changes in certain in-house indices to say that the ill-effects of note ban, such as fall in growth and loss of jobs, are either fading or did not happen at all. The change of call follows close on the heels of the state election results. If this played on their minds, the analysts did not say it aloud.

More such reviews could be on the way, say Street watchers.

The humor aspect apart, this underscores that the opposition to demonetization from the analyst spectrum was based on their skepticism over the ability of the political firmament to execute.

It shows that leftist influence on economic sentiment is still high and needs to be curtailed

...The government seems to have Plan A, B & C on Remonetisation as under.

Plan A was based on the hope that a big chunk of black money will not return to the banking system. Hence, the government, by appropriating unreturned money, could have funded massive infrastructure development to accelerate GDP growth. While the RBI is yet to reveal how much cash has returned to the banking system making Plan A ineffective. Plan B which is currently operational is to ensure that cash deposited in bank passes through the tax net. Eighteen lakh accounts are being targeted to expand the tax net. It is likely that between Rs 50,000 crore and Rs 1,00,000 crore can be recovered in additional taxes through Plan B between the Pradhan Mantri Garib Kalyan Yojna and normal tax route.

Plan C is 'India's China Moment'. In 1980 India and China were almost equal in GDP. By 2016 India has become less than 20% of China. There are many reasons why China has leapfrogged India. One of the main reasons is China's credit expansion.Their credit to GDP ratio is officially about three times higher than India's. It could be more than four times higher if we include shadow banking of China. We failed to create adequate credit to support rapid growth. Our cash to GDP ratio was 12% on November 8, 2016. Velocity of cash is between 1­ - 2 times depending upon distance from election periods. Velocity of bank money is averaging between 5 and 7 times for the last few years.Obsession of Indians to keep higher cash has cost the country dearly in terms of lower growth, higher poverty and poor infrastructure. The RBI is unlikely to print currency to the same level of November 8.

These will transfer about 3­3.5% of GDP from cash in tijoris to the banking system. This has the potential of creating multiplier effect of 15­ -17.5% of GDP as additional deposit and credit over next few years through higher velocity of bank money over cash. These credit flow can create an additional GDP of 15 - ­25% depending upon where and how it is deployed. This is India's China moment and has the potential to erase the past omission of not creating sufficient credit to support rapid growth.

For money multiplier to work, we need to set three things in order: 1) Banks need to extend credit 2) Borrowers need to borrow loans 3) The credit expansion should not create bubble or non­performing assets (NPAs).

One can see that the government is taking steps to make Plan C operational in all the three aspects. PSU banks are seeing appointments at senior levels to ensure speedier decision making. However, there is an urgent need to tackle NPAs and recapitalise PSU banks to ensure that they can accelerate lending. We expect the government to facilitate creation of a large asset reconstruction company in public, private and foreign partnership

Besides, to recapitalise banks, the government will have to think of unconventional approaches like: Surplus with custodian under Enemy Property Act, unclaimed deposits of banks being treated like Unclaimed Dividend and use part of the FX reserves as well as balance sheet of RBI. Borrowing is unlikely to be led by corporate borrowers. Retail borrowers will have to be targeted to push credit. The government has unveiled interest subventions for housing loans up to Rs 6 lakh. An Indian borrower will borrow housing loan at a rate cheaper than an American borrower for up to Rs 6 lakh. There is also a subvention available on housing loans up to Rs 18 lakh. There are more than 3.76 crore members of Employees Provident Fund Organisation. They are now permitted to withdraw up to 90% of their corpus for buying a house. These steps are capable of inducing consumers to borrow for housing. A targeted campaign like opening of Jandhan account can be created to push retails loans to consumers. The government seems to be focused on affordable housing to ensure that accelerated credit flow doesn't create a bubble or NPA.The definition of affordable housing has been changed from builtup area to carpet area to include bigger projects. Profit on affordable housing is given tax exemption. Tax on notional rent for unsold finished inventory for builders has been given exemption for 12 months holding. Cheaper financing is made available with infrastructure status to affordable housing sector. Prefab is being encouraged to cut construction time. Speedier building approvals are being targeted incertain areas to create benchmark for others.The government can consider similar measures in few other industries like textiles especially garmenting and travel and tourism to create growth and jobs.....Remonetisation has provided a tremendous opportunity to India to change the orbit of GDP growth by shifting cash in Tijori to bank account and use the velocity of money to multiply credit to support rapid growth.

A man in Namakkal district of Tamil Nadu has deposited Rs 246 crore in Indian Overseas Bank under the Pradhan Mantri Garib Kalyan Yojna (PMGKY),days before the window to disclose illegal assets under the scheme closes on March 31. The whole amount has been deposited in the old currency notes which were banned on November 8, last year after the government's demonetisation announcement. This could be the largest deposit under the scheme in the state of Tamil Nadu.

A senior Income tax official told TOI, "We were following him for more than 15 days after finding that he had deposited cash in a rural branch of the IOB. First, he tried to hide, but after a few days he agreed to join the Pradhan Mantri Garib Kalyan Yojana (PMGKY) and pay 45% of the total money as tax. As per PMGKY, 25% of the money will be retained with the government without any interest".

"In Tamil Nadu and Pondicherry, we found 28,000 accounts to be suspicious and some of the accounts had deposits in cash to the tune of Rs 85 lakh or move. In the first instance, we send a mail to the account holder asking for details. Most of them have replied and some of the cases have been closed or they have joined the PMGKY scheme accepting that the cash was black money," he said.

PMGKY is an amnesty scheme under which one can disclose unaccounted cash and deposits, and avoid punishment by paying 50 per cent of the disclosed amount as tax, and depositing 25 per cent in an interest-free scheme for four years.

The department has warned that those black money holders who do not declare their illegal assets under the PMGKY scheme will " regret later".However, the department has promised "confidentiality" for those who come forward to disclose their illegal wealth. The I-T department has warned that they have "information" about those who have stashed black money.

The tax and penalty against those who hide their black money and fail to avail the PMGKY could go as high as 137 per cent of the cash deposits made. A person or entity that opts for PMGKY will have to pay 49.9 per cent tax on the income, whereas a person who does not opt for the scheme but offers his black income in his Income Tax Returns will face a tax and penalty rate of 77.25 per cent. The one who does not offer his stash funds under the scheme but is caught with undisclosed income in scrutiny assessment will face 83.25 per cent tax rate.

The rise of a liquidity crunch contrasts with official RBI data, which suggests the total currency in circulation by the end of March 2017 has risen to Rs 13.12 lakh crore (against a low of Rs 7.8 lakh crore immediately after the cash ban and Rs 16.63 lakh crore a year back).

RBI Deputy Governor Viral Acharya said last month the process of replacing currency would take another 2 months.

The rise of a liquidity crunch contrasts with official RBI data, which suggests the total currency in circulation by the end of March 2017 has risen to Rs 13.12 lakh crore (against a low of Rs 7.8 lakh crore immediately after the cash ban and Rs 16.63 lakh crore a year back).

RBI Deputy Governor Viral Acharya said last month the process of replacing currency would take another 2 months.

Apart from Telangana/Hyderabad, the Business Standard story that the above story links to, attributes cash shortages at ATMs due to lax filling of ATMs as bank employees are busy with other end-of-financial-year tasks.

( http://www.business-standard.com/articl ... 068_1.htmlWeekend, FY17 closing hit ATM cash-filling operations "Two senior public sector bank executives said cash-filling at ATMs was minimal over the weekend. Work on closing the books for financial year 2016-17 and the weekend affected the operations, they added. ")

Cash withdrawal has been falling rapidly, post demonetisation, as borne out by the fact that it is down to Rs 32,500 crore in the week to March 24 from a peak of Rs 52,800 crore for the week ended January 13, says a report.

hanumadu wrote:We are into April now. The govt should now come out with how much was declared as black money under PMGKY.

I guess it may have been around 4600 Crores.

I personally will be forced to eat a lot of crow if the number is as low as Rs ~5000 Cr. My lowest estimate was Rs ~200000 Cr (Rs 2 Lac). If the estimates above are true there is a very real possibility that has been an orchestrated release of a very large amount currency off the books of the RBI of the order of Rs ~195000 Cr that passes for the real thing.

I personally will be forced to eat a lot of crow if the number is as low as Rs ~5000 Cr. My lowest estimate was Rs ~200000 Cr (Rs 2 Lac). If the estimates above are true there is a very real possibility that has been an orchestrated release of a very large amount currency off the books of the RBI of the order of Rs ~195000 Cr that passes for the real thing.

PMGKY is only one of the arrows in the Post-Demonetization BM Verification exercise. But it is a slightly bitter arrow due to that 25% lock-up of money for 4 years in a no-interests deposit (on top of 49% IT penalty). There are other arrows too in the post DeMo exercise that often will have to go through the legal/court routes ... but they will take more time to come out with their results. Also there is a promise of 'annonymity' of the identity of people who come under PMGKY to the public in general even though IT folks will be coming back to those guys for every consequent year's IT returns on that new stash of money that got converted into legal white money.